Private real estate investors and community-based financial institutions have developed innovative ways to preserve affordable-housing units that were in danger of losing subsidies, according to a new report.
Three types of financing vehicles have played a critical role in retaining affordable housing developments, the Urban Land Institute and NeighborWorks America said in their jointly issued report. The vehicles are below-market debt funds, private equity vehicles and real estate investment trusts.
"The workforce and affordable housing segment of the market now offers an array of investment opportunities for investors of all types — from financial institutions and pension funds to family offices to high net worth individuals," said Stockton Williams, executive director of the Terwilliger Center and author of the report, "Preserving Multifamily Workforce and Affordable Housing."
"As the country continues to grapple with the worst housing crisis for lower- and middle-income renters it has ever known, the private sector and community-based institutions must play an ever-greater role in ensuring that existing affordable properties remain available," Williams said.
In addition to playing an important societal role in preserving affordable housing, the financing vehicles are delivering returns of between 5% and 12% to their investors, the groups said in the report.
